Trading United Steel (X) using Multiple Time Frames

Dear Readers, United Steel looks like the next big cap stock to make a huge move. All the 'stars and planets' (multiple time frames) are now in line for a huge move as the weekly traders stepped into gear. Let's take a look at the multiple time frames.

United Steel (X) Weekly

United Steel (X) Daily Chart - Looking at the market sentiment, what are the odds of X breaking higher above its 50day MA? Very high chance.

United Steel (X) 60-min Chart - Price action resting after breaking out of its 60-min trading range over a period of 3 weeks. A powerful move is imminent. A breakout buy!

United Steel (X) 15-min Chart - Lastly, if you are trading a smaller time frame such as the 15-min chart and your chart is showing you an enormous gain; hold on to your stock. Reason: A higher time frame trader might be coming in to push the prices even higher. Just look at all the above higher time frames which I have posted above and you'll understand.

 

Trade them well ! Have a great weekend.

BAC (Ascending triangle looks to move soon - 60min chart)

The 60 min chart of BAC looked poised to break to the upside with an ascending triangle formation. Meanwhile the daily chart is consolidating side ways as the coiled spring effect could make its move soon. The chart could also be interpreted as a H&S pattern if it breaks the trend line.

Change in trend - strong case for bulls (S&P500 weekly chart)

The obvious fact is that we are seeing the S&P500 index holding its long term support of 1139pts successfully 3 weeks back on the weekly chart

Moving down to the daily chart, we are seeing a change in character, or rather change in trend when the S&P500 broke out of its trading range, signaling that the Aug/Sep bottom would hold.

Adding to the strong case for the bulls, the Baltic Dry Index widely considered as the purest form of economic indicator, is already on the move, breaking out of its trading range back in Aug/Sep.

The Baltic Dry Index provides an assessment of the price of moving the major raw materials by sea and is known to be one of the purest form of economic indicator in the sense that only member companies who have actual cargo/ships are allowed to trade in this index with no speculative players involved at all.

Wyckoff Method of Technical Analysis - BAC (Oct 2011)

Dear Readers, I was looking for signs of accumulation for the stock of Bank of Amercia (BAC) and decided to apply Richard Wyckoff's method of techinical analysis to the chart pattern of BAC.

BAC could possibly be at the stage where it is preparing to make the jump across the 'creek' a.k.a major resistance OR a failure to make the jump could see it coming down to the $6 or even $5-plus region for a retest of the support.

I came to know of Wyckoff's method of technical analysis when I came across "The Three Skills of Top Trading" by Hank Pruden whereby the Wyckoff schematics of accumulation and distribution were covered extensively by the author. Fantastic read! This book is a must read !

Abbreviations used:

Selling Climax (SC): the point at which widening spread and selling pressure (high volume) usually climaxes and panicky selling by public is absorbed by professional interest at prices near bottom.

Automatic Rally (AR): Relief rally where short-covering can easily cost prices to shoot up

Secondary Test (ST): A retest of the area of selling climax to test the supply and demand at these levels. For a bottom to be found, volume and price spread should be significantly diminished as market approaches
support.

Spring: Also known as a shakeout.

Sign of Strength (SOS): Advance on high volume and price spread

Last Point of Support (LPS): The ending point of a reaction or pullback where support was met, also known as a retest of support where long position can be initiated or to add to profitable ones.


Have a good weekend!

Market Going Sideways - Ready for Bullish Breakout Or Not

S&P 500 is now just below its Ichimoku Clouds. The mere fact that it has not bounce off the resistance and moved lower is perhaps good news for the bulls. The index is now just hugging below the resistance line and if it breaks out of the Cloud, look for it to hit at least the 200 day MA at 1275pts. There are also some positive indication from the Ichimoku Cloud trading overlay that are of favorable to the bulls. If the market favor the bulls, we could see some upside next week.

S&P500

Bank of America

Market updates for week ending 14 Oct 2011

S&P500 rallied and closed just at its major resistance on Friday. We could be seeing a slight pullback for the next few days to 'retest' the resistance-turned-support for S&P500 at the 1185 area. If we could hold the 1185 level, the market could turn bullish into the weeks ahead.

S&P500 Daily Chart

S&P500 Weekly Chart

MGM

BAC

Possible Change in Trend

What a week it was! The major indices broke out of their descending triangle and went on a tremendous breathtaking rally before facing a near term resistance. Somehow, the trend looked like it is changing slowly from bearish to bullish. Stocks looks to be bottoming especially with a Right Angled Broadening formation spotted on the DJ Transportation Average. We'll have to be patient and wait for the breakout higher before placing any long bets. Nonetheless, the higher time frame bullish players are already moving in as the weekly charts of stocks are looking to form bullish reversals.

S&P500

Dow Jones Transportation Average

Bank of Ameria

Goldman Sachs

Capitulation... It Is Not

What looked like capitulation of the stock market on Tuesday 4 Oct 2011 might not be one after all. On Tuesday, stock prices reversed their intraday loss to finish green on extreme high volume. However, it might all comes to nothing when prices of bank stocks were stopped at their near term resistance on Friday.

We could be seeing lower prices to come. If you are a long only investor, you would be better of in a cash position.

BAC

JPM

S&P500 - Trapped in a descending triangle pattern. Bearish

S&P 500 Market Update for 30 Sep 2011

S&P500 closed almost at the end of its trading range of 2 months on Friday, 30 Sep 2011. A break of 1120 support will spell bad news for the bulls. Will it break? We'll know on coming Monday, which happens to be the start of the 4th quarter.

 

BAC - Big Move Coming Soon

Dear Readers, we'll have a huge move coming soon for BAC as it is forming a symmetrical triangle overthe past 2 moinths. Question is: is it going to be up or down? The bulls have a strong case as the MACD is currently displaying a positive divergence. BAC has strong support at the $6 level and if this $6 mark is breached then all hell will break loose. Nonetheless, its still best to wait for the breakout to occur before initiating either a long or short position.

BAC

This downturn should serve as a good buying opportunity as the Baltic Dry Index is telling us a different story as it had already move higher out of its trading range. This spells good news for the economy. I have a post on the Baltic Dry Index here. For all we know, the August low could be the lows for this year!

Baltic Dry Index breaking out

The Baltic Dry Index provides an assessment of the price of moving the major raw materials by sea and is known to be one of the purest form of economic indicator in the sense that only member companies who have actual cargo/ships are allowed to trade in this index with no speculative players involved at all.

Strangely, in these recent weeks, the Baltic Dry Index is breaking out. There can only be one reason; obviously there is a pickup in shipping of materials and thus more demand for such shipping activity. Is this not good news for the economy? Who knows? We could even be seeing the change in trend here as the battered economy picks itself up.

Despite all the gloom and doom, the index is churning another different storyline.

Critical support - Make or Break

There was blood on Wall Street for the past 2 trading days. The question now on everyone's lips is whether if there will be another leg down; its a very high possibility there stocks will see further downside if we are to take out the lows back in Aug 2011. Let's check out the Dow Jones index and some other stocks on my watch list.

Dow Jones Index - The index broke down from its bearish wedge and is now at a very crucial support. If this support gives way, new lows will be imminent.

Bank of America

In the midst of doom and gloom, some stocks are holding out better than the rest. These stocks definitely have to be on our watch list, without a doubt.

Pharmacyclics, Inc (PCYC)

MITK

ARCO - Coming off cup & handle pattern

I am starting to like trading stocks which are making new high or those that are pulling back to the 50 day MA after a sustained uptrend. All the brand names, although offering a deep discount, have huge resistance overhead. I made a huge adjustment to my trading style by buying into ARCO and DTLK, two relatively unknown companies to me. In spite of the Dow dropping huge on Friday night, ARCO was actually giving me huge profits instead.

Now that I have experience the benefits of looking for new companies that are making new 52 highs, I realised that I actually enjoy the process of hunting down these charts and looking for the correct buy point. I will be posting more of these companies here soon. Stay tune.

Potential Monsters Stocks - AUTH, SPRD and NUS

Dear Readers, I am currently contemplating if I should be placing my long bets on these 3 potential monsters stocks. These companies are coming off nice bases and have come up with new innovations or products in their respective sectors.Top of my buy list is AUTH, followed by SPRD and then NUS.

Authen Tec, Inc. (AUTH) - Company is a provider of security, identity management and touch control technologies for PC, wireless devices and information technologies market. It recently announced that it is creating new mobile payment solutions in a collaboration with another company. Stock is coming off a 5 month cup and handle pattern.

Spreadtrum Communications, Inc. (SPRD) - The company announced that it was recently selected by Samsung as a TD-SCDMA baseband chip supplier. Not that I know what a baseband chip means but one thing i know is that the SPRD is earning money and the technicals is looking very good. Stock is coming off a 5 month cup and handle pattern.

Nu Skin Enterprises, Inc. (NUS) - To my limited knowledge, this company do not really have any new products or innovation to showcase but apprently it is pulling in the big money from its new markieting strategy. Its technicals is good and is coming off a 5 month flat base.

Have a great weekend !

Market is range bound despite the Dow dropping more than 300 points on Friday

Dear readers, despite the Dow dropping almost 300 points on Friday, the market is still stuck in a range. If this range holds, then it should be bouncing off the bottom channel of the trading range next week. However, if we failed to hold this level and closed below the low of this range, then we could possibly see further downside for stocks. Friday was a good opportunity for range traders to initiate their short term position.

S&P500

General Electric - Range bound between $15 and $16.50. Time to buy the bottom of the trading range on Friday.

Century Aluminum - Range bound in an ascending triangle formation.

AIG - Looking surprising good and its in the midst of forming an ascending triangle amid all the doom and gloom in the market.

Initiated 2 trades - DTLK & ARCO

I bought into DTLK yesterday and ARCO at the start of today's trading. These two stocks are currently in a uptrend. Datalink Corp (DTLK) is an IT computer providing information storage for mid and large sized companies. While it is not a new company, it is pulling in big bucks as earning has surprised on the upside thus far. I initiated a swing trade on DTLK when the stock pulled back to the 50 day MA at about $8.77.

DTLK

 
Arcos Dorados Holdings Inc (ARCO) is the world's leading franchiser of McDonald's restaurant with a huge base in South America. Its stock recently IPO-ed in mid April at $21. The technicals of the stock is pretty good with  a classic cup and handle pattern. I initiated a position this morning at $27.05 on a successful retest of its breakout point.


ARCO

If my positions are not stop out, my holding period will be for months. Remember to trade with stop loss. I will be pyramiding up at proper buy point too.

Baltic Dry Index - Glimmer of Hope

Lo and behold, amid these turbulence times, where news are at their gloomiest, the Baltic Dry Index, widely known as the purest form of forward looking indicator is silently picking up and moving above their 200day MA. What does this mean for the stock markets?  =)

 

Modification to trading strategy

I have always been trading stocks mostly from the banking, solar, and basic materials sectors. My results is only mediocre in the current period as many such stocks are currently trending down along with the general market. There are huge layers of overhead resistance and the gains are limited. In addition, I believe that I am not using the principals of the Ichimoku Clouds correctly in the sense that I tried to look for the bottom instead of shorting or buying stocks that are breaking out of the clouds.

Old habits die hard as I along with most others in the human race, are programmed to look for bargains rather than buying stocks on new highs or shorting stocks making new lows. I have decided to change my trading style to look for the next big potential monster stock breaking out to new high or making swing trades to stocks which are moving back to their 50 day MA after prolonged up moves. These would be the new potential leaders of their respective sector. However, this would mean that I need to move out of my comfort zone to trade these relatively unknown companies. Who knows, they could be the new big names in future.

Those who are familiar with these trading strategies would remember these as preachings from William J. O’Neil’s CANSLIM methods.  I first read O’Neil’s ‘How to Make Money In Stocks’ back in 2009. However, for some reason or another, I had always putting off applying this strategy for my own trading as I was a bit lazy to scan through charts for potential stocks. Perhaps the time has come now for a change. These stocks are exhibiting the best charts during these times of turbulence and most, if not all, are trading above the Ichimoku Clouds. There may be instances of failed breakouts but these stocks offered the best chances of monster moves once market stability is back. I am currently stalking these potential stocks.


MITK

SPRD

RGR

DTLK

LQDT

BMY

CF

EXPE

ARCO

Have a great long weekend.

Financial stocks expecting more upside - BAC and Citigroup

We are beginning to see less and less sellers of beaten down financial stocks as indicated by the side way consolidation on the daily charts. Buyers are more and more willing to hold on to these stocks which they bought at fire-sale prices as they are less transcations between buyers and sellers as indicated by the dropping volume.

The odds are for the prices to move higher from here before the "real" resistance at the area between the 50day MA and just below the clouds. Please also see this post on bigger time-frame buyers coming into the picture.

Bank of America - Target price between $9.50 and $10. Stop loss for BAC at $7.95.

Citigroup